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Job and worker flows in high adjustment cost settings

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Abstract.

This paper analyses the relationship between the size of adjustment costs and the intensity of labor market flows. I argue that high adjustment costs inhibit adjustment to temporary shocks, leaving adjustment to long-lived shocks unchanged. Worker turnover is also reduced because of the negative impact that adjustment costs have on churning.

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Correspondence to José M. Varejão.

Additional information

Received: January 2002, Accepted: November 2002,

JEL Classification:

J23, J63

I am grateful to the FCT for funding this research (research grant Praxis/PCSH/C/CEG/13/96), and to Pedro Portugal, Daniel Hamermesh and two anonymous referees for helpful comments on earlier versions of this paper. I thank the Department of Statistics at the Ministry of Labor for providing the data. CETE is supported by the FCT.

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Varejão, J.M. Job and worker flows in high adjustment cost settings. Portuguese Economic Journal 2, 37–51 (2003). https://doi.org/10.1007/s10258-002-0015-y

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  • DOI: https://doi.org/10.1007/s10258-002-0015-y

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